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Customer Centric Approach.

Summary: Oommen John, Assistant General Manager -- tyres, Towell Auto Centre the authorised distributors of Bridgestone in Oman shares his thoughts on the company's operation and performance. Mayank Singh reports

Can you give us a brief background of Bridgestone in Oman?

At Towell Auto Centre, sole distributor of Bridgestone tyres in Oman we offer the full range of tyres to our customers and we have our presence in almost every segment. We supply to ministries, fleet owners, and retail customers. Tyres are sold to retail customers mainly through our own outlets and few selected dealers located across the country. Currently we are also working on franchisee model outlets and hope to have couple of shops operational before the end of the year. Our focus has always been on being close to the customer. Keeping this initiative in mind, we started setting up our own outlets in 2001. Currently we have the largest network of stores in Oman with 29 outlets consisting of 23 outlets for cars and 4x4 vehicles, and six centres for truck and bus and for off the road segment. We are also present in Duqm and in Petroleum Development Oman (PDO) areas like Nimr, Fahud and Safa. These outlets support PDO contractor's in their operations. In terms of the units sold Bridgestone should be the number one brand in Oman.

How has the performance of Bridgestone been in the last one year and which is the biggest segment in terms of business?

The commercial segment is the biggest contributor in terms of value, as the tyres are higher priced. It is the cream of the business and a big focus area. In terms of units we sell more of passenger cars and 4x4 tyres. Performance wise we have never had any issues, as Bridgestone is known for its superior quality and performance. Business has been lot more challenging in the last one and a half years due to the fall in oil prices. However we have been able to adjust our prices lower due to lower raw material costs and a very favorable exchange rate for the yen. The prices were adjusted lower to the tune of almost 20 per cent from the peak levels, which has helped in increasing our market share. The fall in prices have a negative impact on the margins however we have been able to cover it up to a large extent by the additional volumes generated from the reduction in prices.

Is it a double whammy for you as the macro economic environment is adverse and the fall in commodity prices has reduced your margins?

Margins are under pressure and the problem is universal. The customer knows our products and the performance standards are well known in the market. For the truck and bus and the OTR (off the road) segment we have gone in for retreading of tyres and this is helping our business. Overall we are doing well under the prevailing market conditions.

How do retreaded tyres compare to new ones in terms of cost and performance?

We have our own retreading plant in Oman for truck and bus tyres and off the road tyres (only one in Oman). This is something that is highly beneficial for the customer and is environment friendly. The cost of a retreaded tyre is less than 50 per cent of a new tyre. This has helped in growing our business, as customers stay with us, due to this additional benefit. A retread truck and bus tyre takes seven barrels of crude oil to produce, while a new one takes 22 barrels of crude oil, so it is environment friendly and one is leaving something for the next generation. If you see 100 per cent of the airline industry uses retread tyres and they retread a tyre on an average six times. If there was a safety concern they would not use it in aircrafts. Moreover, we offer the same warranty on retread tyres, as for the new ones. The rule in Oman is that all tyres imported into the country needs to have a Gulf Standard Organisation (GSO) certificate, so all the sizes that we produce are sent to GSO for certification and they are certified accordingly before being sold. We have already produced and supplied more than 30,000 units of truck tyres in Oman.

What are your plans to propel growth in a slow moving market and take on competition?

The Bridgestone brand has a global reputation as the tyre industry market leader, renowned for producing quality products and being at the forefront of technology, innovation and continuous

improvement. At Towell Auto Centre we maintain this reputation by offering the highest quality products and services. We are stocking and distributing through our own outlets and through selected dealer network quality tyres carefully chosen to meet the local conditions. Our outlets are manned by trained staff and that helps the customer in selecting the right product for their usage. We keep doing campaigns and other activities throughout the year, so that people are aware and are benefitted by the schemes. Of course there is pricing pressure and pressure on margins as the supply is more than the demand but we are con dent of maintaining our market share and growing in these tough conditions.

We have the largest network of stores in Oman with 29 outlets consisting of 23 outlets for cars and 4x4 vehicles, and six centres for truck and bus and for off the road segment

A number of people prefer to go to the neighbouring markets like Dubai to get tyres, is this eating into your market?

The pricing between Dubai and our market is almost the same from our principals, though the margins may differ slightly between distributors according to the operating expenses which can be in the range of four to five per cent. The point that is to be understood here is, Oman operating conditions are severe and the patterns used here are mostly different from what is sold in UAE. Those products do not necessarily give the same performance like the ones that are available in Oman. There has also been large in flow of unregulated tyres into UAE and other countries in this region which are priced way below the tyres imported through official channels. But these tyres do not meet the local requirements and are not approved by the GSO, and not recommended for usage here. Authorities are aware of this issue and the necessary controls are being implemented to stop this menace.

Where do you source tyres from in Oman?

We get it from various sources, depending on availability. Bridgestone has 60 factories across the globe and we are currently sourcing from around 10 factories.

How do you see the market shaping up in the next six months?

The market will continue to be challenging, though things may start improving in the later part of the year, as crude oil prices have stabilised and has started moving up. Right now the mantra is to improve efficiencies and cut down on unnecessary expenses. Our aim is to be a complete tyre solutions provider, which means that we assist our customers to select the right tyre, we train them on how to maintain tyres and keep them abreast of the latest technological developments. This way we can help our valuable customers reduce their fleet maintenance costs. Additionally commercial customers can enhance tyre performance by using retreads. Our team is trained and fully equipped to support customers throughout the lifecycle of the tyres.

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Publication:Oman Economic Review (OER)
Geographic Code:7OMAN
Date:Jul 23, 2016
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